A senior Chinese telecoms executive committed fraud when she lied about links between Huawei and a shell company used to sell telecommunications equipment to Iran in breach of US sanctions, Canadian prosecutors have told a Vancouver court.

Meng Wanzhou, Huawei’s chief financial officer, appeared in court on Friday as she sought bail in a case that has sparked a major international dispute between China and the US. After more than five hours of debate, the court has not yet decided if Meng will be granted bail as she fights an extradition order to the US. The closely-watched hearing will resume on Monday morning.

Crown prosecutors allege Meng – the daughter of Huawei’s founder – engaged in “conspiracy to defraud multiple financial institutions” in 2013 when she attempted to convince bankers that Huawei and a former Hong Kong subsidiary SkyCom were wholly separate entities.

China-US feud threatens Canada as Huawei executive due in court

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“Ms Meng personally represented to those banks that Skycom and Huawei were separate, when in fact they were not separate,” said Crown attorney John Gibb-Carlsey. “Skycom was Huawei.”

SkyCom employees used Huawei email addresses and bank records linked the two companies together, and SkyCom was used to engage in business deals with sanctioned countries, including with Iranian telecom companies, the court heard. The alleged sanctions breaches occurred between 2009 and 2014.

In a packed Vancouver courtroom, Crown attorneys argued that Meng’s family’s vast financial resources – and the prospect of up to 30 years in an American prison – provided her with ample incentive to flee if granted bail.

They also cited her refusal to visit the US, where her son attends school, as evidence of a sustained effort to evade a criminal investigation.

Meng’s lawyer, David Martin, told the court: “Wealth can’t be a prohibition to bail. Even a person of enormous wealth can be released from custody in our great country.”

Martin sought to portray her as a passionate businesswoman, committed to the success and image of a company founded by her father, Ren Zhengfei, where she has worked at for the past quarter of a century.

Her health problems – high blood pressure and sleep apnea – were also cited as reasons to release her on bail.

Martin said she would not breach any court orders. “She would not embarrass China itself,” he said, adding that her husband and daughter were in Vancouver.

Huawei released a brief statement on Saturday saying it has “every confidence that the Canadian and US legal systems will reach the right conclusion” over the arrest of Meng.

Her legal team also pointed out that while SkyCom was once a subsidiary, Huawei divested from the company and Meng vacated her seat on SkyCom’s board of directors. They also argued that Iranian sanctions were complex and SkyCom’s civilian telecommunications equipment sales likely weren’t in violation of any rules.

Meng’s surprise arrest on Saturday as she travelled to Mexico is the latest salvo in a feud over trade and technology that has pitted the US against China, with Canada caught in the middle.

Since Saturday, the telecom executive has been detained at the Alouette Correctional Centre for Women, a facility 50km outside Vancouver’s downtown core.

The case, which has prompted fury in China, has put Canada in a difficult position: comply with a request from its neighbour and largest trading partner, or risk angering the country it has, for months, sought stronger ties with.

Canadian wariness is not without cause: the last high-profile extradition request executed by Canada resulted in tit-for-tat action by the Chinese.

In 2014, British Columbia resident Su Bin was arrested by Canadian officials, on accusations that he had stolen top-secret American fighter jet plans. He later pleaded guilty to the charges in a California court.

Shortly after his arrest, two Canadians, Kevin and Julia Garret, who ran a coffee shop in Dandong, were arrested by Chinese officials. Kevin Garrett was charged with espionage and spent two years in prison.

“China plays rough. We need to be on our guard and need to be aware that we’re going into a very difficult period with China,” said David Mulroney, Canada’s former ambassador to China.

The Canadian Extradition Act requires that in order for a person to be extradited, the individual must be facing charges for an offence deemed criminal in both Canada and the country seeking the extradition request. Crown prosecutors argue Meng violated section 380 of Canada’s criminal code, which pertains to fraud.

As China pressures Canada to release her, the detention has also created domestic political fissures with opposition parties expressing frustration over a lack of information from the federal government.

In an interview with Fox News, the former prime minister Stephen Harper said Justin Trudeau should ban Huawei from Canada.

“These are organizations, ultimately tightly tied to the Chinese security apparatus, and we think there are some real, serious issues there,” said Harper. “The United States is encouraging western allies to essentially push Huawei out of the emerging 5G network, and my personal view is that is something western countries should be doing in terms of our own long-term security issues.”